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OTTAWA—The federal government has received hundreds of applications from pot producers seeking to become licensed marijuana growers under the Conservatives’ new scheme, but has processed fewer than two dozen so far.

In a formal written response last week to Liberal MP Hedy Fry, Health Minister Rona Ambrose provided a snapshot of the rocky transition to a new legal scheme that has cost nearly $2 million, began in earnest but was stalled by a court injunction three weeks ago.

Ontario leads the way in the number of applications, as well as the number of producers — nine — licensed to date. One high-profile Ontario applicant has decided to enter the medical marijuana business.

Former Ontario minister of health George Smitherman working with Kim Derry, former deputy chief of the Toronto police, and Markham pharmacist Kandavel Palanivel, plans to apply in the coming weeks for a license to grow medical marijuana at a farm in the Uxbridge area.

But he may have a long wait.

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Health Canada says to date, just 12 producers have been licensed to supply an estimated 37,800 medicinal pot users in Canada. Another eight companies are licensed to grow for other purposes, such as selling stock to other producers. For example, two licences approved in Saskatchewan are part of the same business. One is authorized to sell to the public and the other is authorized to sell to other producers.

The new licensing scheme is meant to force medicinal pot users to buy from federally authorized producers, and to disallow individuals from growing it themselves or having someone grow for them — a system the government said was open to abuse.

On March 21, a Federal Court judge in B.C. ruled that those who hold a personal production licence could continue to do so while a court challenge is underway.

Fry, a doctor and MP for Vancouver-Centre, says the new numbers prove the federal court gave Ambrose an inadvertent “reprieve” because it is clear her department does not have the resources to adequately implement the new system.

The old program had been set to end on March 31.

“The injunction sort of saved them,” said Fry. “The question is: were they ever going to be able to meet the needs?”

In her reply to Fry’s question, Ambrose said by the end of January her department had received 434 applications to become a licensed producer, with nearly 100 of those later withdrawn, refused or returned because they were incomplete.

A department official, providing background information, said in an interview that number has since increased to nearly 700 applications received, with close to 220 rejected outright or withdrawn, and about 475 applications currently being processed.

Fry said the federal Conservatives cut 840 jobs from Health Canada in 2012, yet the department acquired more responsibility for food and drug inspections and cannot keep up.

“The question is was Health Canada going to meet any of its needs with regard to, not only medical marijuana approvals, but of any drug approval. They’re way behind,” said Fry. “The question is do we have resources, period.”

As of the end of January, the cost of implementing the new regulations was pegged at about $1.8 million.

That cost may increase now that Ambrose has announced she intends to file a legal appeal of the March 21 ruling that allowed a number of B.C. medical patients to continue to grow their own supply or have someone produce for them.

It is not clear how much medicinal pot will end up being produced under the new program as there is no cap. Fry had asked whether there would be an adequate supply, and Ambrose’s response suggests her department foresaw no problem.

The first six licensed producers had “a production capacity greater than 30,000 kilograms” and “will be offering various strains of cannabis to clients across Canada,” according to Ambrose’s reply.

The new regulations require people to have a “valid medical document” and to register with a licensed producer by mail or online in order to buy medical marijuana, which would then be delivered by the licensed producer to the client’s mailing address “hence promoting accessibility,” Ambrose wrote.

For now, the government says the two programs will run concurrently. Ottawa will continue to accept and process production applications under the new regime; and anyone who held a valid permit on March 21 to buy or produce medical pot may continue to do so. But no new personal production permits are being issued by the government.

Health Canada says that program cost more than $16 million in 2011-12 and had been increasing each year.”

The government will play no role in setting the price of medical marijuana, however Ambrose indicated that: “Currently, the price of marijuana for medical purposes is fixed by licensed producers and ranges from $3 to $12 per gram.”

Her department’s website lists the licensed producers. It warns: “Dried marijuana is not an approved drug or medicine in Canada. The Government of Canada does not endorse the use of marijuana, but the courts have required reasonable access to a legal source of marijuana when authorized by a physician.”

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